Business Recorder
ISLAMABAD: Pakistan’s ambitious fiscal reform programme, backed by the World Bank, is off to a slow start, with implementation yet to formally begin months after approval, according to the latest Implementation Status & Results Report released by the Bank. The USD 600 million “Pakistan Public Resources for Inclusive Development” programme—approved on December 19, 2025—remains non-effective, as key administrative approvals are still pending. The project’s PC-1 is under review by the Central Development Working Party (CDWP), delaying the rollout of reforms aimed at strengthening Pakistan’s fiscal system and supporting macroeconomic stability. Despite the delay, the World Bank has rated overall progress and implementation as “Moderately Satisfactory,” while flagging the overall risk level as “Substantial,” citing persistent political, macroeconomic, and institutional challenges. READ MORE: Aurangzeb discusses reform agenda, social protection with WB At its core, the programme seeks to overhaul Pakistan’s revenue collection, public spending efficiency, and statistical systems. However, with zero disbursement so far and no activities formally launched, nearly all performance indicators remain unchanged from baseline levels. Key fiscal targets include raising the tax-to-GDP ratio from 12.3 percent to 15 percent by 2030, reducing tax expenditures by 30 percent, and increasing the share of direct taxes in total revenue. Progress on these fronts is currently stalled, though authorities expect clearer data once the fiscal year concludes. Efforts to modernise tax administration—such as implementing a single GST portal and increasing the number of taxpayers filing non-zero returns—have faced structural bottlenecks. In particular, a lack of coordination between federal and provincial governments continues to hinder the harmonisation of tax systems. On the expenditure side, reforms aimed at improving transparency and efficiency—including digitising vendor payments and expanding e-governance services—have yet to begin. Targets such as enabling two million people to access digital public services and shifting 70 percent of vendor payments to digital platforms remain distant. The report also highlights slow movement on politically sensitive reforms, including the government’s rightsising initiative. While analytical work has been completed, cabinet approval is still pending, and fiscal savings have yet to materialise. Similarly, reforms to reduce power sector subsidies—currently costing Rs 1.19 trillion annually—are still in the design phase, despite ongoing advisory support. Institutional capacity gaps present another major hurdle. Key positions, including the Project Management Unit director and technical specialists, have not yet been filled. Several governance and oversight mechanisms, including procurement systems and audit frameworks, are still under development. The programme also places strong emphasis on improving Pakistan’s statistical capacity. Targets include raising the country’s Statistical Performance Indicator score from 68 to 90 and establishing new data and intelligence units. However, progress remains at zero across all indicators. Looking ahead, the World Bank plans its first implementation support mission later this year, which will provide a clearer picture of on-ground progress. Until then, the programme remains in a preparatory phase, with success hinging on swift approvals, institutional readiness, and sustained political commitment. The report underscores a familiar challenge: while Pakistan’s reform agenda is comprehensive on paper, translating it into action remains the real test. Copyright Business Recorder, 2026
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